Minister strips aide's power to issue mining contracts

JAKARTA (JP): Minister of Mines and Energy I.B. Sudjana confirmed yesterday he had stripped the director general of mines, Kuntoro Mangkusubroto, of his authority to issue final contracts of work to mining contractors.

But Sudjana, facing a barrage of reporter's questions, denied the measure had anything to do with Kuntoro's indecisiveness over issuing a contract of work to Bre-X Minerals of Canada pending the resolution of its dispute with its local partners.

"It was simply an internal matter of my ministry and it was within my authority to revoke the licensing power of the director general. Outsiders are not entitled to know the reasons," Sudjana said.

Reporters asked Sudjana many questions yesterday at a ceremony for the signing of power supply contracts between the State Electricity Company and private power generators, but none of the questions touched upon the power deals.

All the questions focused on Sudjana's controversial decision to revoke Kuntoro's licensing authority. Kuntoro is well respected in the business community.

Kuntoro, who was at the ceremony, refused to answer any questions, saying it was now the minister's matter.

Bre-X Minerals, which claims to have made the world's largest gold discovery in Busang, East Kalimantan, with estimated reserves of 30 million ounces, made a strategic alliance late last month with Sigit Hardjojudanto, President Soeharto's eldest son.

Bre-X granted Sigit's PT Panutan Duta a 10 percent carried interest in two sections of the gold mine -- Busang I and Busang II -- and a consultants fee of US$1 million a month for 40 months.

Bre-X announced last month it planned to lend PT Panutan money to buy out its two Indonesian partners -- PT Krueng Gasui and PT Sungai Atan Perdana.

But PT Krueng Gasui president Jusuf Merukh said early this month that his company's and PT Sungai Atan's shares in the Busang gold project were not for sale.

Analysts see Bre-X's strategic alliance with PT Panutan as a short-cut to resolving its dispute with its Indonesian partners which has delayed its final contract of work for the Busang gold project.

Nonetheless, Kuntoro, who until the middle of last month had the final authority on mining contracts of work, put Bre-X's contract on hold pending the resolution of its dispute.

Sudjana issued decree No. 1409, dated Oct.17, 1996, to revoke three previous minister of mines and energy rulings issued in 1985 and 1986 which vested contract-of-work licensing with the director general of mines.

The latest decree transfers the licensing authority on mining contracts directly to the minister of mines and energy, restricting the director general of mines' responsibility to mainly administrative work.

Sudjana said Bre-X's contract-of-work application was still being assessed.

"Its application was only recently filed and it is still being assessed. We cannot process it as quickly as frying a banana," he retorted.

Early this year Kuntoro's office launched what businessmen hail is an efficient information system for mining zoning.

The information system, developed for Rp 8 billion ($3.4 million), is designed to make investing in the country's mineral industry easier. (bnt/vin)